Dutch Appeals Court Overturns Landmark Climate Ruling Against Shell

A Dutch appeals court has ruled in favor of Shell, reversing the landmark 2021 decision that held the oil giant accountable for greenhouse gas (GHG) emissions linked to the use of its products by customers. The initial ruling had ordered Shell to reduce its emissions by 45% by the end of this decade, an unprecedented requirement that covered not only the company’s direct operations but also emissions from the end-use of its fuels.

The environmental group Friends of the Earth Netherlands, known locally as Milieudefensie, expressed shock at the court’s decision, calling it a setback for the climate movement and for people worldwide concerned about the future. The group had originally argued that Shell was undermining the objectives of the Paris Agreement by failing to adequately curb its emissions.

The 2021 ruling marked a significant milestone, mandating Shell to slash emissions by 45% by 2030 from a 2019 baseline. This directive included Scope 1, 2, and 3 emissions, with Scope 3 emissions—those from the use of Shell’s products—constituting the vast majority of the company’s carbon footprint. The court’s initial decision highlighted Shell’s duty to adhere to global climate targets and its obligation to reduce emissions not just from its own operations, but also from the consumption of its products.

However, in the recent appeal, Shell contended that Dutch law does not require companies to meet such stringent emission targets, particularly ones exceeding established sector-specific policies like the EU’s Fit for 55 initiative. Shell also argued against being held responsible for emissions from the use of its products by customers, claiming that such a mandate would compel the company to stop selling fuels without actually reducing demand for those fuels globally.

In its ruling, the appeals court acknowledged the pressing role of fossil fuel consumption in the climate crisis and reiterated the need for action by major emitters, including companies like Shell. However, the court found insufficient scientific grounds to uphold a specific emissions reduction requirement of 45% for Shell. It also agreed with the company that enforcing reductions in customer-related emissions would be ineffective, as demand for fossil fuels would simply shift to other suppliers.

Shell welcomed the ruling, with CEO Wael Sawan describing it as the right outcome for the energy transition, the Netherlands, and the company itself. Earlier this year, Shell had adjusted its energy transition strategy, maintaining its long-term goal of achieving net-zero emissions by 2050 and reaffirming its commitment to halve emissions from its operations by 2030. However, the company also revised some of its interim targets, lowering its 2030 emissions intensity reduction goal from 20% to a range of 15-20%.